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ENGROSSED HOUSE
BILL NO. 2949 By: McCall and Lepak of the
House
and
Daniels of the Senate
An Act relating to revenue and taxation; amending 68
O.S. 2021, Section 2355, as last amended by Section
1, Chapter 27, 1st Extraordinary Session of the 59th
Oklahoma Legislature, O.S.L. 2023 (68 O.S. Supp.
2023, Section 2355), which relates to income tax
rates for individuals and other entities ; modifying
income tax rate for designated tax year; providing
for reductions in income tax rates based upon certain
determination with respect to tax collections;
providing for further reductions in income tax rates
using prescribed formula; and providing an effective
date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
last amended by Section 1, Chapter 2 7, 1st Extraordinary Sessio n,
O.S.L. 2023 (68 O.S. Supp. 2023, Section 2355), is amended to read
as follows:
Section 2355. A. Individuals. For all taxable years beginning
after December 31, 1998, and before January 1, 2006, a tax is hereby
imposed upon the Oklahoma taxable income of every resident or
nonresident individual, which tax shall be computed at the option of
the taxpayer under one of the two following methods:
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1. METHOD 1.
a. Single individuals and married individuals filing
separately not deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part there of,
(2) 1% tax on next $1,500.00 or part thereof,
(3) 2% tax on next $1,250.00 or part thereof,
(4) 3% tax on next $1,150.00 or part thereof,
(5) 4% tax on next $1,300.00 or part thereof,
(6) 5% tax on next $1,500.00 or part thereof,
(7) 6% tax on next $2,300.00 or part thereof, and
(8) (a) for taxable years beginning after December
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainde r, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joint return
under the provisions of the Internal Revenue Code and
heads of households as defined in the Internal Revenue
Code not deducting federal income tax:
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(1) 1/2% tax on first $2,000.00 or part thereof,
(2) 1% tax on next $3,000.00 or part thereof,
(3) 2% tax on next $2,500.00 or part thereof,
(4) 3% tax on next $2,300.00 or part thereof,
(5) 4% tax on next $2,400.00 or part thereof,
(6) 5% tax on next $2,800.00 or part thereof,
(7) 6% tax on next $6,000.00 or part thereof, and
(8) (a) for taxable years beginning after De cember
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65 % tax on the remainder.
2. METHOD 2.
a. Single individuals and married individuals filing
separately deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or part thereof,
(3) 2% tax on next $1,250.00 or part thereof,
(4) 3% tax on next $1,150.00 or part thereof,
(5) 4% tax on next $1,200.00 or part thereof,
(6) 5% tax on next $1,400.00 or part thereof,
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(7) 6% tax on next $1,500.00 or part thereof,
(8) 7% tax on next $1,500.00 or part thereof,
(9) 8% tax on next $2,000.00 or part thereof,
(10) 9% tax on next $3,500.00 or part thereof, and
(11) 10% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joint return
under the provisions of the Internal Revenue Code and
heads of households as defined in the Internal Revenue
Code deducting federal income tax:
(1) 1/2% tax on the first $2,000.00 or part thereof,
(2) 1% tax on the next $3,000.00 or part thereof,
(3) 2% tax on the next $2,500.00 or part thereof,
(4) 3% tax on the next $1,400.00 or part thereof,
(5) 4% tax on the next $1,500.00 or part thereof,
(6) 5% tax on the next $1,600.00 or part thereof,
(7) 6% tax on the next $1,250.00 or part thereof,
(8) 7% tax on the next $1,750.00 or part thereof,
(9) 8% tax on the next $3,000.00 or part thereof,
(10) 9% tax on the next $6,000.00 or part thereof, and
(11) 10% tax on the remainder.
B. Individuals. For all taxable years beginning on or after
January 1, 2008, and ending any tax year which begins after December
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31, 2015, for which the determination required pursuant to Sections
4 and 5 of this act is made by the State Board of Equalization, a
tax is hereby imposed upon the Oklahoma taxable income of every
resident or nonresident individual, which tax shall be computed as
follows:
1. Single individuals and married individuals filing
separately:
(a) 1/2% tax on first $1,000.00 or part thereof,
(b) 1% tax on next $1,500.00 or part thereof,
(c) 2% tax on next $1,250.00 or part thereof,
(d) 3% tax on next $1,150.00 or part thereof,
(e) 4% tax on next $2,300.00 or part thereof,
(f) 5% tax on next $1,500.00 or part thereof,
(g) 5.50% tax on the remainder for the 2008 tax year and
any subsequent tax year unless the rate prescribed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent upon the
determination required to be made by the State Board
of Equalization pursuant to Section 2355.1A of this
title.
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2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permitted to
file a joint return under the provisions of the Internal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
(a) 1/2% tax on first $2,000.00 or part thereof,
(b) 1% tax on next $3,000.00 or part thereof,
(c) 2% tax on next $2,500.00 or part thereof,
(d) 3% tax on next $2,300.00 or part thereof,
(e) 4% tax on next $2,400.00 or part thereof,
(f) 5% tax on next $2,800.00 or part thereof,
(g) 5.50% tax on the remainder for the 2008 tax year and
any subsequent tax year unless the rate prescribed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent upon the
determination required to be made by the State Board
of Equalization pursuant to Section 2355.1A of this
title.
C. Individuals. For all taxable years beginning on or after
January 1, 2024, and except as provided pursuant to the provisions
of subsections D and E of this section, a tax is hereby imposed upon
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the Oklahoma taxable income of every resident or nonresident
individual, which tax shall be computed as follows:
1. Single individuals and married individuals filing
separately:
(a) 0.25% tax on first $1,000.00 or part thereof,
(b) 0.75% tax on next $1,500.00 or part thereof,
(c) 1.75% tax on next $1,250.00 or part thereof,
(d) 2.75% tax on next $1,150.00 or part thereof,
(e) 3.75% tax on next $2,300.00 or part thereof,
(f) 4.75% tax on the remainder.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permit ted to
file a joint return under the provisions of the Internal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
(a) 0.25% tax on first $2,000.00 or part thereof,
(b) 0.75% tax on next $3,000.00 or part thereof,
(c) 1.75% tax on next $2,500.00 or part thereof,
(d) 2.75% tax on next $2,300.00 or part thereof,
(e) 3.75% tax on next $4,600.00 or part thereof,
(f) 4.75% tax on the remainder.
No deduction for federal income taxes paid shall be allowed to
any taxpayer to arrive at taxable income.
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D. Individuals. For all taxable years beginning on or after
January 1, 2025, and except as provided pursuant to the provisions
of subsection E of this section, a tax is hereby imposed upon the
Oklahoma taxable income of every resident or nonresident individual,
which tax shall be computed as follows:
1. Single individuals and married individuals filing
separately:
(a) 0.25% tax on first $1,000.00 or part thereof,
(b) 0.75% tax on next $1,500.00 or part thereof,
(c) 1.75% tax on next $1,250.00 or part the reof,
(d) 2.75% tax on next $1,150.00 or part thereof,
(e) 3.75% tax on next $2,300.00 or part thereof,
(f) 4.75% tax on the remainder.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is p ermitted to
file a joint return under the provisions of the Internal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
(a) 0.25% tax on first $2,000.00 or part thereof,
(b) 0.75% tax on next $3,000.00 or part thereof,
(c) 1.75% tax on next $2,500.00 or part thereof,
(d) 2.75% tax on next $2,300.00 or part thereof,
(e) 3.75% tax on next $4,600.00 or part thereof,
(f) 4.75% tax on the remainder.
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No deduction for federal income taxes paid shall be allowed to
any taxpayer to arrive at taxable income.
E. Individuals. 1. Except as otherwise provided by this
subsection, for all taxable years beginning on or after January 1,
2026, a tax is hereby imposed upon the Oklahoma taxable income of
every resident or nonresident individual, which tax shall be at the
rates prescribed in paragraphs 1 and 2 of subsection D of this
section reduced by 0.0025, for purposes of any reduction, for any
income tax year beginning on the January 1 date immediately
succeeding a fiscal year ending on the preceding June 30 for which
the State Board of Equalization makes a certification, at its
December meeting, that total t ax collections for such fiscal year
exceeded the total tax collections for the immediately preceding
fiscal year by Four Hundred Million Dollars ($400,000,000.00) or
more. Subject to the determinations regarding the increase in total
tax collections as pre scribed by this paragraph, t he reductions
prescribed by this paragraph shall be made for all applicable income
tax years until the rate of individual income tax as prescribed by
subparagraph f of both paragraphs 1 and 2 of subsection D of this
section equals three percent (3.0%).
2. If the individual income tax rate prescribed by subparagraph
f of paragraphs 1 and 2 of subsection D of this section reaches
three percent (3.0%) as provi ded by paragraph 1 of this subsection,
such income tax rate shall be in effect for the income tax year
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beginning on the January 1 date immediatel y following the income tax
year for which the r ate of income tax was three and twenty-five
hundredths percent (3.25%), and the rate of three per cent (3.0%)
shall be reduced each succeeding income tax year by 0.3, such
subtraction to be made from the whole number three (3). Such
reduction shall be made for eac h of the ten (10) succeeding income
tax years, each beginning January 1, until the rate of individual
income tax equals zero percent (0%). The provisions of th is
paragraph shall also be applicable to any other rate of income tax,
as previously reduced, imposed pursuant to subparagraphs a through e
of paragraphs 1 and 2 of subsection D of this section until each
rate of tax also equals zero (0). If the rate of tax pre scribed by
subparagraph f of paragra phs 1 and 2 of subsection D of this section
reaches three percent (3.0%) , then any remaining rate prescribed by
any other subparagraph of paragraph 1 or 2 of subsection D of this
section shall be divided by the whole num ber ten (10). The result
of that computation, expressed as a decimal, shall be the amount
subtracted from any such remaining income tax rate until each such
rate also equals zero (0).
F. Nonresident aliens. In lieu of the rates set forth in
subsection A above, there shall be imposed on nonresident aliens, as
defined in the Internal Revenue Code, a tax of eight percent (8%)
instead of thirty percent (30%) as used in the Internal Revenue
Code, with respect to the Oklahoma taxable income of such
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nonresident aliens as determined under the provision of the Oklahoma
Income Tax Act.
Every payer of amounts covered by this subsection shall deduct
and withhold from such amounts paid each payee an amount equal to
eight percent (8%) thereof. Every payer required to deduct and
withhold taxes under this subsection shall for each quarterly period
on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Tax Commission, and shall file a return with each such payment.
Such return shall be in such form as the Tax Commission shall
prescribe. Every payer required under this subsection to deduct and
withhold a tax from a payee shall, as to the total amounts paid to
each payee during the calendar year, furnish to such payee, on or
before January 31, of the succeeding year, a written statement
showing the name of the payer, the name of the payee and the payee's
Social Security account number, if any, the total amount paid
subject to taxation, and the total amount deducted and withheld as
tax and such other information as the Tax Commission may require.
Any payer who fails to withhold or pay to the Tax Commission any
sums herein required to be withheld or paid shall be personally and
individually liable therefor to the State of Oklahoma.
E. G. Corporations. For all taxable years beginning after
December 31, 2021, a tax is hereby imposed upon the Oklahoma taxable
income of every corporation doing business within this state or
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deriving income from sources within this state in an amount equal to
four percent (4%) thereof.
There shall be no additional Oklahoma income tax imposed on
accumulated taxable income or on undistributed personal holding
company income as those terms are defined in the Internal Re venue
Code.
F. H. Certain foreign corporations. In lieu of the tax imposed
in the first paragraph of subsection D G of this section, for all
taxable years beginning after December 31, 2021, there shall be
imposed on foreign corporations, as defined in th e Internal Revenue
Code, a tax of four percent (4%) instead of thirty percent (30%) as
used in the Internal Revenue Code, where such income is received
from sources within Oklahoma, in accordance with the provisions of
the Internal Revenue Code and t he Oklahoma Income Tax Act.
Every payer of amounts covered by this subsection shall deduct
and withhold from such amounts paid each payee an amount equal to
four percent (4%) thereof. Every payer required to deduct and
withhold taxes under this subsection shall for each quarterly period
on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Tax Commission, and shall file a return with each such payment.
Such return shall be in such form as the Tax Commission shall
prescribe. Every payer required under this subsection to deduct and
withhold a tax from a payee shall, as to the total amounts paid to
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each payee during the calendar year, furnish to such payee, on or
before January 31, of the succeeding year, a written statement
showing the name of the payer, the name of the payee and the payee's
Social Security account number, if any, the total amounts paid
subject to taxation, the total amount deducted and withheld as tax
and such other information as the Tax Commission may require. Any
payer who fails to withhold or pay to the Tax Commission any sums
herein required to be withheld or paid shall be personally and
individually liable therefor to the State of Oklahoma.
G. I. Fiduciaries. A tax is hereby imposed upon the Oklahoma
taxable income of every trust and estate at the same rates as are
provided in subsection B or, C, D, or E of this section for single
individuals. Fiduciaries are not allowed a deduction for any
federal income tax paid.
H. J. Tax rate tables. For all taxable years beginning after
December 31, 1991, in lieu of the tax imposed by subsection A, B or,
C, D, or E of this section, as applicable there is hereby imposed
for each taxable year on the taxable income of every individual,
whose taxable income for such taxable year does not excee d the
ceiling amount, a tax determined under tables, applicable to such
taxable year which shall be prescribed by the Tax Commission and
which shall be in such form as it determine s appropriate. In the
table so prescribed, the amounts of the tax shall be computed on the
basis of the rates prescribed by subsection A, B or, C, D, or E of
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this section. For purposes of this subsection, the term "ceiling
amount" means, with respect to an y taxpayer, the amount determined
by the Tax Commission for the tax rate category in which such
taxpayer falls.
SECTION 2. This act shall become effective January 1, 2025.
Passed the House of Representatives the 13th day of March, 2024.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2024.
Presiding Officer of the Senate